Wednesday, August 3, 2011

POT is down 41 cents at $56.43, SOIL, the fertilizer ETF, is down 21 cents at $15.19. MOO is down 35 cents at $52.22.
From Forbes' ETF Channel:

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Agribusiness ETF (MOO) where we have detected an approximate $65.7 million dollar inflow — that’s a 1.1% increase week over week in outstanding units (from 110,400,000 to 111,650,000). Among the largest underlying components of MOO, in trading today Potash Corporation (POT) is off about 2.5%, and Monsanto Company (MON) is lower by about 0.5%. For a complete list of holdings, visit the MOO Holdings page »

The chart below shows the one year price performance of MOO, versus its 200 day moving average....

And from Schaeffer's Research:

Dissecting the rationale behind activity at POT's weekly call options

Calls were hot on Potash Corp. of Saskatchewan (POT - 57.43) on Tuesday, with roughly 42,000 of these bullishly oriented options changing hands on the session -- well above the fertilizer firm's expected daily call volume of around 24,000 contracts. By comparison, just 10,000 puts were exchanged on Tuesday.
Yesterday's skew toward calls continues a recent trend for POT, which currently sports a 10-day International Securities Exchange (ISE) call/put volume ratio of 3.1. Not only does this ratio indicate that calls bought to open have more than tripled puts purchased during the past two weeks, but it also ranks above 75% of all other readings taken during the past year. In other words, traders on the ISE have initiated POT calls at a faster clip just one-quarter of the time.

As a result, POT's Schaeffer's put/call open interest ratio (SOIR) is perched at 0.69, in the 24th annual percentile. This low-ranking SOIR suggests that short-term option players have been more call-heavy on POT just 24% of the time.

On Tuesday, it was very short-term options that were in heavy rotation, with POT's weekly options stealing the spotlight. Over 14,000 contracts changed hands on the weekly August 5 60-strike call, while the higher-strike August 5 62.50 weekly call saw volume of 8,200 contracts traded. The bulk of these calls crossed the tape at their respective ask prices, suggesting they were purchased, and open interest at each of these weekly options increased substantially overnight. In other words, it appears that fresh bullish positions were added at these short-term options -- both of which are significantly out of the money.

By purchasing to open the weekly 60- and 62.50-strike calls, the traders may be betting on POT to stage a quick -- and quite significant -- rally by the end of the week. However, with POT hovering just below the $57 level, this is a lot of ground for the shares to cover in a very short amount of time. That being said, there seems to be another, more likely, explanation for this call volume....MORE